When your company is insolvent and needs to be placed into liquidation, the stressors around not being able to meet your financial obligations are prevalent. The idea of more bills and fees can be extremely overwhelming, particularly when you find out that liquidation itself isn’t without cost. However, if you’re at the point of seeking liquidation it means that this is the very best outcome for you and any other stakeholders to move onto a fresh start. With that, it’s good to wrap your mind around the fee component and begin your liquidation process with a clear understanding of what’s involved, and why.
How much is it going to cost to liquidate my company in 2022?
Liquidator’s fees are paid out of the company’s assets realised during the course of the liquidation, therefore at no cost to the directors personally. Creditors of the company approve the liquidators fees to be paid from the realisation of company assets, with the balance of realisations paid to creditors.
But what happens if your company does not have any assets to pay the liquidator?
If the Company has no assets, then the Liquidator cannot recover his/her fees. In this instance, it is common practice for a liquidator to request either an upfront payment, or an indemnity, from the Director to ensure the costs of the liquidation are recovered, prior to the commencement of the liquidation.
Depending on the very specific circumstances of your company, and who you chose to appoint as the liquidator, we have seen insolvency practitioners request upfront payments, or indemnities, from directors in the range of $5,000 to $25,000 to liquidate an insolvent company without any assets.
Payment of the fee is something that would need to be worked out with your liquidator and organised by you using funds not tied to the company. This could be a loan from a family member or friend, your own savings, a monetary gift, inheritance or you could enquire about a payment plan with your chosen liquidator.
Can I do my own liquidation?
No. If your company is insolvent and unable to pay its creditors in full, then you need to appoint a registered liquidator. If you do not appoint a liquidator, a creditor will in due course call in their debt and apply to the court to have a liquidator of their choice appointed to the company.
When it comes to finding a liquidator to suit your needs, the key is in researching as much as you can. At Shaw Gidley, our aim is to provide the best possible outcomes to the people we are best suited to work with. Contact us today for an obligation free consultation and we can talk about your company, your desired outcome and the most effective pathways to get you there.